Marriott is making $10 million worth of hotel rooms available to health care workers, funded by their credit card partners Chase and American Express. Hilton has a similar initiative funded by American Express. These efforts both do good, and provide revenue to hotels, during the most challenging period for property owners ever.
Another source of hotel revenue is sheltering the homeless, and quarantining others without a place to stay during the coronavirus crisis. In my home town of Austin the city leased the Crowne Plaza to house people who didn’t have a place to safely self-quarantine.
California has a major initiative to support vulnerable populations at risk of coronavirus. Homeless shelters are the opposite of social distancing, and you can’t easily wash your hands often living on the street.
It presents a challenge as public health authorities attempt to stop the spread of the virus, not only within communities but across communities as well. In other words, it’s as much a social service for the non-homeless as for the homeless themselves.
- So far the state has procured over 8000 of a planned 15,000 hotel rooms for those who are “homeless and particularly susceptible to or exhibiting symptoms of coronavirus infection” and about 1800 of the rooms are currently occupied.
- 75% of the cost is borne by FEMA, the other 25% by local counties. (The state has distributed $150 million to counties so far to assist the homeless during the coronavirus crisis.)
- This doesn’t count rooms being sourced at the county level. For instance San Diego contracted for 1300 rooms themselves, and Los Angeles over 1000 rooms.
- Some of the properties are Comfort Inns and Radissons, though small independent hotels make up the bulk of inventory because they’re more likely to be located near homeless shelters.
Since it’s a government program, they’re not getting a great deal on room rates. In fact it’s insane how much they’re paying more than federal government hotel rates during normal times when hotels are completely empty, and these are rates that the lowest-end accommodations joining the program aren’t likely to see in the best of times.
Rooms are being booked for 60-90 days at a time. Hotels are also eligible for “additional reimbursement for higher insurance rates and associated costs.” This isn’t because the rate is meant to cover damage, either, because they’ll also “pay for any property damage incurred.”
It’s always presented challenges when a hotel leases rooms or floors to house the homeless while continuing to sell rooms to their usual guests. But government programs can pay well and that’s tempted New York-area (and JFK airport) hotels especially.
Now that hotels are empty it’s business, and it’s helping make mortgage payments.